National Bank reduces refinancing rate to 9.5% following reduction in inflation
The NBG decided to decrease the refinancing rate to 9.5 percent, following a “more pronounced” reduction in the domestic inflation rate than anticipated. Photo: Nino Alavidze/Agenda.ge
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The National Bank of Georgia on Wednesday said its Monetary Policy Committee had decided to decrease the refinancing rate by 0.5 percent, to 9.5 percent, following a “more pronounced” reduction in the domestic inflation rate than anticipated.
The latest inflation data by the National Statistics Office of Georgia showed the consumer price index in November decreased by 0.2 percent compared to the previous month, while the annual inflation rate amounted to 0.1 percent.
The National Bank said domestic as well as external factors, and its tight monetary policy, had “effectively anchored” inflation expectations that continued to decline.
The Bank said inflation of domestically produced goods had gradually approached the three percent target, registering at 3.8 percent in November.
The current forecast for 2024 indicates inflation temporarily overshooting its target, primarily driven by base effects, before it gradually aligns with the targeted rate in the medium term”, it said.
Despite the “positive” trends, the central bank also mentioned inflationary risks that concerned demand-side inflationary pressures caused by economic growth dynamics.
Nevertheless, with the economy having fully rebounded to the pre-pandemic trend, the risk of demand-side inflation remains noteworthy. The NBG is vigilantly monitoring the economic dynamics and stands prepared to implement necessary measures should signs of sustained inflationary pressures emerge”, it said.
The Bank also said despite the current reduction of inflation, the monetary policy rate continued to be maintained at a “relatively elevated level”.
The NBG added it would continue a gradual normalisation of monetary policy, in alignment with “evolving inflation forecasts”.
The National Bank of Georgia on Tuesday published its latest macroeconomic scenarios, which forecast the domestic economy to grow by six percent this year and five percent in 2024.
Georgian Prime Minister Irakli Garibashvili on Monday reviewed the economic development of the country since 2012 in his end-of-year comments on the Government’s work, telling an event in Tbilisi the domestic economy had grown by ₾30 billion ($11.15bln) over the past three years.
Prices of certain food products and non-alcoholic beverages, furnishings, household equipment and maintenance, as well as healthcare decreased month-on-month across Georgia in November, the National Statistics Office said on Monday.
The National Bank of Georgia on Monday said gradual decreases in international food prices and maintenance of its strict monetary policy had led to a “low” domestic inflation rate.
Prices of certain food products and non-alcoholic beverages increased month-on-month across Georgia in December, while prices for clothing and footwear and furnishings, household equipment and maintenance decreased, the National Statistics Office said on Wednesday.
Deputy Economy Minister Vakhtang Tsintsadze on Wednesday said Georgia had managed “not only to maintain a high economic growth rate but also became one of the first countries in the wider region and in Europe” with related indicators over the past year, curbing inflation and bringing the numbers below the target three percent mark.
The National Bank of Georgia on Wednesday said it was continuing its exit from a tight monetary policy by reducing the refinancing rate by 0.5 percentage points, down to nine percent, due to “low inflation environment”.